Zomato Enters The Movie Business: Is BookMyShow in Danger?

BookMyShow Beware: Your Consumers Could be Snatched!!

Climbing to the top in the food delivery sector is apparently not enough for Zomato as it is now eyeing the “movie & event ticket business.” As per multiple sources, Zomato is willing to pay a grand ₹1,500 crore to buy off Paytm’s ticket-booking business.

Both sides (Zomato and Paytm) have confirmed that they are exploring options for transferring the ticket booking business. Although no final date for the acquisition has been confirmed yet, developments on the matter are going strong.

So, is Bigtree Entertainment Pvt. Ltd.’s (parent company of BookMyShow) dominance in the sector in danger? What could Zomato gain from this acquisition, and why is Paytm willing to sell its well-established business at this moment?

Let’s find answers to these to-be questions while analysing the financial and sectorial aspects of related parties.

For what's latest with Zomato, click here. ←

Why is Zomato Entering the Movie & Event Ticket Business?

Debuting in 2008 as "FoodieBay", Zomato was the brainchild of Deepinder Goyal and Pankaj Chaddah, both Bain & Company alumni. The website initially functioned as a restaurant discovery tool with listings and recommendations.

Reigning as a food delivery business, Zomato has been experimenting with different areas and has succeeded in most of them. Take BlinkIt's acquisition, for example. In June 2022, Zomato acquired Blinkit, formerly known as Grofers, in an all-stock deal for ₹4,477 crore.

Now, BlinkIt is performing well with positive reputations, increasing sales, and fairly efficient operational and financial management. But, BlinkIt isn’t the only diversion Zomato took and made it work. In fact, Zomato began a carnival-like event named "Zomaland" in 2018 which is a massive food and entertainment fiesta. It's essentially a two-day event held in multiple cities across India.

Zomaland features a vast array of cuisines from various restaurants and vendors. It often includes live music performances by popular artists, comedians, or other entertainers, adding a festive vibe to the event. There are also fun games, interactive experiences, and engaging activities to keep attendees entertained.

If you are wondering how Zomaland benefits Zomato and its consumers/merchants, then here’s a brief explanation:

• Special Deals and Offers: Restaurants participating in Zomaland might offer exclusive discounts, deals, and special menus for attendees.
• Family-Friendly Atmosphere: Zomaland caters to people of all ages, often featuring dedicated zones or activities for children.

If you are interested to read about Zomato's journey, then click on the link.

Now, why am I talking about Zomaland, and how is it connected with Zomato’s plan to start selling tickets? Here’s the connection:

To attend a Zomaland event in your city or state, you, as a consumer, usually need to buy a ticket. This is possible via Zomato's website, which explains the food delivery giant’s plan to enter the ticket market.

Coming back to our topic,

• Zomato’s move to acquire Paytm’s ticket business would strengthen its "going-out" business segment (so to say), which likely includes restaurant reservations and other nightlife activities.
• Acquiring Paytm's ticketing service would allow users to book movies and events directly on Zomato's platform, creating a more comprehensive "night out" experience.

Benefits of Movie & Event Ticket Selling Business for Zomato

Here are some detailed pointers on how integrating Paytm's movie and events vertical could benefit Zomato:

a. Cross-Promotional Opportunities:

Movies or any other outdoor entertainment options come with several tagalongs, one of which is food. Most people will either grab a quick bite before and after watching a movie or plan a relaxing dinner/lunch with loved ones in a restaurant. This preference could aid Zomato in promoting its services based on consumers' data.

b. Movie & Dining Bundles:

Zomato could offer combo packages that include movie tickets and meals at nearby restaurants, encouraging users to spend more.

c. Targeted Advertising:

Zomato could use user data to recommend restaurants based on their movie or event preferences. For example, someone buying tickets to an action movie might see ads for burger joints, while someone attending a play might see ads for a fancy Italian restaurant.

d. Expand Customer Base:

This particular benefit is a no-brainer as the partnership between Zomato and Paytm.

e. Paytm Users:

Zomato could tap into Paytm's existing user base, attracting moviegoers and event attendees who might not have used Zomato before.

f. Increased Visibility:

The addition of movies and events would make Zomato a more attractive app, potentially attracting new users who are looking for a one-stop shop for outings.

g. Diversify Revenue Streams:

Zomato's revenue model looks like this:

The acquisition would help Zomato boost revenue in multiple sectors, such as:

• Ticketing Fees: Zomato could earn a commission on every movie ticket or event ticket sold through its platform.
• In-app Advertising: More users and a wider range of activities on the app could create more opportunities to sell targeted advertising space.
• Delivery Tie-Ups: Zomato could partner with concession stands at movie theatres or event venues to offer food and drink delivery services.

Hence, if this transfer works out, it will be a win-win situation for Zomato. And from the food delivery firm's track record, I must say things look in their favour.

What's Paytm's End Game With This Deal?

We know that Zomato is likely to get a sweet deal with this, well, deal. But what’s in it for Paytm? Paytm has been in the online ticket booking segment since 2016, when it announced a strategic partnership to sell PVR movie tickets. Although this segment doesn’t contribute a large sum to Paytm’s overall revenue operations, it does give good numbers.

If you look at the above infographic, the ticket booking business falls under the "Commerce & Cloud Services" sector. According to FY23 data, it contributes 19% to the overall revenue, and it will decrease considerably if Paytm finalises selling the business.

So, why would Paytm do so? After all, the e-commerce giant has been in murky waters, with a ban on Paytm Payments Bank and Paytm’s decision to get the help of third-party support for larger loans and NBFC distributions. For more details, check out the article: Paytm Payments Bank's Ban.

What’s happening here is Paytm has been in a restructuring mode ever since the rough patch of the last couple of months. It is looking to streamline its operations and focus on core businesses like payments and financial services.

So, selling the movie ticketing business would allow them to free up resources and potentially improve their financial standing. Here’s a brief explanation of what Paytm could be targeting with this deal:

a. Streamlined Operations: Selling the ticketing business allows Paytm to streamline its operations and resources, focusing on its core strengths, such as digital payments and financial services. This could lead to improved efficiency and profitability in those areas.

b. Cash Injection: A potential sale of the company could result in a cash injection for Paytm, providing funds for investing in core business areas, paying down debt, or venturing into new opportunities.

c. Collaboration Opportunities: The sale might open doors for future collaboration between Paytm and Zomato. Paytm could potentially integrate Zomato's ticketing service within their own app, offering a more comprehensive service to their users.

d. Paytm Payments Integration: If Zomato integrates Paytm as a preferred payment option for ticket purchases, Paytm could benefit by increasing its user base and transaction volume within the Zomato platform.

It looks like it won’t be such a bad idea for Paytm, either.

Will BookMyShow Be Really Impacted?

BookMyShow has been the top player in the online ticket booking sector for almost 25 years since its establishment in 1999. The moat that was both a curse and a blessing for BookMyShow at the beginning was that it was the only one with such a new business idea.

It persevered, innovated, and faced multiple challenges and is now at the top. But the arrival of Zomato might shake its throne in the following ways:

a. Market Share in Jeopardy:

Zomato's entry into the ticketing space, combined with Paytm's user base and infrastructure, could threaten BookMyShow's dominance. Zomato might leverage its existing user base and brand recognition to attract moviegoers and event attendees who wouldn't normally use BookMyShow.

b. Price Wars and Discounts:

To compete effectively, Zomato might offer discounts and promotional deals to attract users, potentially leading to price wars in the ticketing market. This could put pressure on BookMyShow's margins and profitability.

c. Convenience for Zomato Users:

Zomato users would have a wider range of services within a single app, potentially making Zomato a more attractive platform for planning outings and entertainment. If booking becomes more convenient on Zomato, this could entice some users to switch from BookMyShow for movie tickets and events.

Hence, BookMyShow needs to up its game if it wants to avoid getting its consumers snatched.

Zomato's Fundamentals (Business Model & Financials)

When it comes to the business model, Zomato has four segments:

1. Food Delivery:

This is Zomato's core business and primary source of revenue. It allows users to order food online from a wide variety of restaurants and have it delivered directly to their doorstep.

Zomato partners with restaurants and delivery personnel to facilitate this service. They typically charge restaurants a commission on each order and may also levy delivery fees from customers.

2. Quick Commerce:

This segment focuses on delivering essential items and groceries in a very short timeframe, usually within minutes or hours. This could include anything from bottled water and snacks to medicines and personal care products.
Zomato uses its current delivery network and partnerships to provide rapid commerce services in certain markets.

3. Restaurant Supplies:

This segment caters to restaurants by providing them with the essential supplies to operate. These could include cooking ingredients, packaging materials, cleaning supplies, and even kitchen equipment. Zomato might partner with wholesalers or distributors to offer these supplies to restaurants through its platform.

4. Going-Out:

This segment aims to be a one-stop shop for users planning a night out. It could include features like:

• Table Reservations
• Event Ticketing
• Nightlife Discovery

Zomato plans to increase its revenue by focusing more on the "going-out" segment, for which it is ready to commit over ₹1,500 crore at the beginning.  

When you look at Zomato's annual report for FY 2022-23, you will see that although revenue has increased from ₹4,687.3 to ₹7,760.9 crore, total expenses have also risen significantly.

This has led to Zomato facing yet another year with a loss of ₹9,710 crore. Add the ₹1,500 crore needed to fund the acquisition of Paytm's movie ticket business, and Zomato could have 1-2 more years of losses to report.

Despite these financial downturns, Zomato remains the top player in the food delivery industry. As the connections between the two explain, it could become even better with the online ticketing business.

If you want to learn about Zomato's scam, then click on the link. Zomato's Rotten Food Packaging Scam.

The Bottom Line

Overall, selling the ticketing business could be a strategic move for Paytm to refocus on its core competencies and improve its financial standing. Zomato's success hinges on effectively integrating Paytm's ticketing service and offering a seamless user experience.

Their marketing and promotional strategies will also be crucial in attracting users. Let’s not forget that Zomato may need more time than usual to establish itself in the sector since it has other ventures and areas to focus on.

What do you think? Would you be interested in booking tickets and dining from a single app?

What's the Latest?

On 15th October, 2024

Zomato Xtreme was initially introduced as a hyperlocal, i.e. city delivery platform, with a main focus on guaranteeing that customer’s packages are delivered smoothly and punctually. With this dependable service, users can anticipate increased customer satisfaction. However, the service didn't attract as many users as expected, which led to its temporary discontinuation in July 2024. Now, Zomato is bringing back its Xtreme feature with a revised focus!

Xtreme will provide transportation services for packages weighing up to 10 kg within city boundaries, tailored to the requirements of small businesses and large retail companies. This service is created to simplify local deliveries, aiding businesses in managing their logistics with greater efficiency.

This feature by Zomato is created to simplify logistics, making it easy for retailers to send and receive packages. Theis streamlined procedure aims to enhance operational efficiency for businesses, enabling them to concentrate on essential tasks instead of being concerned with the complexities of delivery.

The latest Xtreme version will fully utilise Zomato's vast and effective food delivery system. This existing network will set a strong base for offering dependable logistics solutions, guaranteeing that Zomato's core food delivery services are improved and optimised for higher performance.

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